Top Stories--March 10-15

U.S. Indicts Andersen Over Shredding

Federal prosecutors hit accounting firm Andersen with a criminal indictment for allegedly orchestrating the “wholesale destruction” of tons of Enron Corp. documents, raising new doubts about the company’s survival.

The one-count indictment is the first of what Justice Department officials hinted could be a string of criminal charges arising from the collapse f energy giant Enron, which filed for bankruptcy protection Dec. 2 amid an accounting scandal.

The indictment did not name any individuals, but it caused fear among Andersen’s work force. Many employees are worried that the charge could mean the demise of the 88-year-old firm.

Others fear that the death of the fourth-largest accounting firm also could reduce pressure for reforms and leave the industry even more rife with conflicts of interest.

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More Telecom Firms Come Under Scrutiny

Probes of the telecommunications industry widen, as the Securities and Exchange Commission demanded internal accounting documents from WorldCom Inc. and Qwest Communications International Inc.

Meanwhile, a congressional panel has asked telecommunications carrier Global Crossing Ltd. to turn over information concerning its accounting practices and executive compensation.

The letter from leaders of the House Energy and Commerce Committee made 22 specific requests, including seeking the names of outside accountants who worked for Global Crossing, which filed for bankruptcy protection in January.

The SEC also is reviewing certain Global Crossing accounting issues.

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SEC Seeks to Take Exec’s Stock Options

The Securities and Exchange Commission sued a New Jersey businessman, seeking to strip him of bonuses and stock options that the agency alleges were granted as the result of fraudulently inflated financial statements.

It is the first time in a securities fraud case that the SEC has tried to take away an executive’s stock options, although the agency previously has gone after executive bonuses and profits from stock sales.

The move came only days after President Bush demanded more accountability of corporate executives in a speech that outlined a 10-point plan to deal with executives who mislead investors.

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Delta Drops Travel Agent Commissions

Delta Air Lines has stopped paying commissions to travel agents booking its domestic flights, and other airlines are expected to follow suit.

Delta, citing its $1-billion loss last year and the growth of Internet ticketing sites, said it would keep paying commissions on tickets bought overseas and as incentive bonuses to select agencies.

A travel agents trade group blasted Delta’s move, and said it would force travelers to pay agents higher fees for bookings. At the same time, the end of commissions could put smaller agencies out of business.

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Disneyland Paris Adds Studios Theme Park

Walt Disney Co., which transformed the near-bankrupt Disneyland Paris into Europe’s most visited tourist attraction, added some Hollywood glitz to its French resort with the opening Saturday of a theme park modeled on its studio tour in Orlando, Fla.

The 50-acre park, called Walt Disney Studios, is billed as a tribute to American and European cinema and is next to Disneyland Paris.

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TRW to Fight Northrop Bid by Divesting

TRW Inc. launched a counterattack to a hostile takeover bid by rival Northrop Grumman Corp. as it announced plans to break up the company by spinning off or selling both its automotive and aircraft parts businesses.

Escalating the fight for the defense industry’s biggest remaining prize, TRW officials said its board unanimously agreed to accelerate long-held strategic plans to divest itself of nondefense-related businesses while urging shareholders to reject Northrop’s proposal to acquire the company for $47 a share, or $5.9 billion.

TRW’s move, which was expected because it had rejected the same offer the previous week, fueled speculation among investors that Northrop would increase its bid or withdraw the offer. By week’s end, TRW stock had risen 1.1%, closing Friday at $50.84.

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Survey: ‘Living Wage’ Laws Reduce Poverty

“Living wage” laws, adopted by dozens of cities and counties in recent years, reduce overall poverty levels despite causing some job loss, according to a cautiously worded study from a conservative economist.

David Neumark, a Michigan State University economist, is known for his opposition to minimum-wage hikes. His findings were released through the nonpartisan Public Policy Institute of California.

Neumark still is no fan of an increase in the minimum wage, which he maintains won’t reduce poverty and could even exacerbate it. Living wage laws have the opposite effect, he said, because they are more targeted.

Beneficiaries are more likely to be adults heading poor households instead of those in middle-class homes.

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U.S. to Pursue Curbs on Tobacco Marketing

The Justice Department is demanding sweeping changes in tobacco marketing and manufacturing practices as part of a federal lawsuit that many observers had expected to be dumped by the Bush administration.

In documents given to industry attorneys, the Justice Department said it would seek a court order forcing tobacco companies to reduce levels of nicotine, the habit-forming substance in their cigarette brands, “to the greatest extent possible.”

They called for other anti-smoking measures, including elimination of cigarette ads in stores, use of graphic warning labels filling at least 50% of the space on cigarette packs and print ads, and a ban on lobbying against ordinances directed at secondhand smoke.

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Movie Theater Firm Plans to Go Public

Denver billionaire Philip Anschutz has filed for a $345-million initial public stock offering by his Regal Entertainment Group.

The widely anticipated move is another step in consolidating his position as the nation’s No. 1 movie theater owner.

It also signals a possible turnaround in the financially troubled film exhibition business, which has seen eight major chains file for bankruptcy protection during recent years.

In 2001, total box-office revenue increased for the 10th consecutive year, rising 10% to $8.4 billion.

Attendance grew roughly 5% to 1.5billion moviegoers.

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Letterman Spurns ABC Offer, Stays With CBS

David Letterman agreed to a new contract with his current network, leaving jilted suitor ABC measuring the damage its bid might have done to ABC News and “Nightline,” the venerable program Letterman would have displaced.

After weighing the two offers, the 54-year-old late-night host signed a three-year agreement with CBS, with an option for two additional years.

ABC quickly announced in the wake of Letterman’s decision that “Nightline” will remain in its current time slot opposite Letterman’s program and “The Tonight Show With Jay Leno” on NBC.

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Regional Recovery Plan Boosts Tourism

A regional recovery plan crafted to keep the Los Angeles-area economy on track appears to be working, especially in attracting more tourists than anticipated in the aftermath of Sept. 11.

The Los Angeles Convention & Visitors Bureau said industry analysts expected international visitors to Los Angeles would drop in 2001 by 800,000, but the actual number was closer to 650,000.

Domestic tourism was forecast to decline 5%, but rose by 1.2%.

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For a preview of this week’s business and economic news, please see Monday’s Business section